Do you want to start driving school business?
Are you thinking about starting a driving school? The biggest advantage of starting this business is that you can start it with lower initial investments as compared to other businesses and can make it extremely profitable, provided that you plan and execute it successfully. But there are a lot of things which need to be considered before starting this venture.
The first thing is how to secure the license and permits for starting a driving school. In addition to that, you should also consider whether you will purchase the required cars or procure them on the lease. So, the first step you should take is to develop a comprehensive business plan for driving school covering all aspects of your business.
The business plan will not only help you in startup but will also form the basis of your company’s future policies. So, for assisting you with writing an effective business plan, here we are providing the business plan for a driving school business startup named ‘Star Driving School’.
2.1 The Business
Star Driving School will be a licensed and insured driving school in Manhattan that will mainly provide private and commercial driving education to its customers along with other related services for business.
The business will be owned by Mark Gill. Mark is an MBA from Harvard and has served in various managerial positions at various driving schools in the United States that’s why he knows everything about how to open a driving school business.
The company will hire a staff comprising of trainers, assistants and sales executives, all of which will be trained for one month prior to onboarding.
Star Driving School will be a licensed driving school where we will offer driving classes for people belonging to all age-groups along with specialized classes for professional drivers.
2.4 Target of the Company
The business targets are to balance the cost of a startup within the next year of launch and to become the best driving school in Manhattan. Our sales and revenue targets for next three years are summarized in the chart below:
3.1 Company Owner
Star Driving School will be owned by Mark Gill. Mark is an MBA from Harvard and has served in various managerial positions at various driving schools in the United States.
3.2 Why the Business is being started
Mark has an entrepreneurial mind and by starting a driving school business he aims to make profits in this industry.
3.3 How the Business will be started
Star Driving School will be located at a ten minutes’ drive from the main residential district of Manhattan. In addition to the usual inventory, the company will initially procure 10 cars with varying engine capacities, 3 minibusses, and 2 medium-sized commercial trucks. All vehicles will be procured on lease for a duration of 5 years after which the leasing contract will be renewed.
The costs for startup are as follows:
The startup requirements are as follows:
|Research and Development||$42,750|
|TOTAL START-UP EXPENSES||$247,500|
|Other Current Assets||$222,500|
|Start-up Expenses to Fund||$121,875|
|Start-up Assets to Fund||$195,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$118,750|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$118,750|
|Cash Balance on Starting Date||$121,875|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$695,000|
|Loss at Start-up (Start-up Expenses)||$313,125|
|TOTAL CAPITAL AND LIABILITIES||$221,875|
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Services for customers
Before you write a driving school business plan, you must decide on what services will you provide to your future customers. It will also help you to acquire permits and license from the local governing bodies.
Star Driving School will be a licensed and insured driving school in Manhattan that will mainly provide private and commercial driving education to its customers along with other related services. Our main services include:
- Driving classes for all individuals aspiring to learn car driving
- Special driving classes for professional drivers aspiring to learn bus and truck driving
- Short driving refresher courses
- Advisory and consultancy services for helping students acquire driving licenses and car documents
Marketing Analysis of driving school business
The most important component of a driving school business plan is its accurate marketing analysis because it decides whether a startup in this industry will become a success or end in failure. That’s why an accurate marketing analysis must be carried out before developing the business plan for driving school.
5.1 Marketing Trends
There are more than 8,000 driving education businesses associated with the Driving Schools Association of the Americas. Out of these 8,000 institutes, there are 6,000 professional driving schools. The number of driving education institutes has constantly increased over the recent years and is expected to increase at the same rate for the next few years. Considering these stats, we can establish that any business plan for driving school can become extremely profitable provided that you plan it successfully.
5.2 Marketing Segmentation
Our target market is the residential community living nearby at the 10 minutes’ drive from our office. The community consists of all types of people from varying backgrounds. There are currently more than 738,000 households in Manhattan out of which 17.1% have children under the age of 18 living with them, 25.2% are married couples living together and 10.9% are persons with 65 years of age or older. Our experts have identified following target groups for our services:
The detailed marketing segmentation of our target audience is as follows:
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The first group of our customers comprises of those teenagers who just turned 18 years of their ages and want to learn how to drive. These beginners are mostly high school students.
The second category includes those people who are in the possession of a vehicle and need a license to hit the road. These learners will be subjected to proper driving training and will also be helped with acquisition of driving licenses and car documents.
The last category includes commercial drivers or those people who want to pursue a career in driving by learning bus or truck driving. This group will be subjected to vigorous training and special road safety education.
The detailed market analysis of our potential customers is given in the following table:
|Potential Customers||Growth||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5||CAGR|
5.3 Business Target
Our driving school business plan targets are:
- To become the best driving school in Manhattan within next 5 years
- To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
- To balance the initial cost of the startup with earned profits by the end of the first year
5.4 Product Pricing
Product pricing is also one of the main deciding factors in the success of a startup that’s why we have priced our services in slightly lower ranges (10% less) as that of the prices offered by our competitors.
Like marketing analysis, sales strategy for business is also an important component of driving school business plan so it must be thought through before you think about how to open a driving school business.
6.1 Competitive Analysis
There are thousands of established driving schools in the United States and it is not easy to survive and excel in such a competitive environment. That’s why you need to come up with something different before you start a driving school business. Our competitive advantage lies in the power and dedication of our team. We have the best team of experienced trainers who are willing to go to any limit for ensuring customer satisfaction. On top of that, our prices are very reasonable and comparatively lower than most of our competitors, thus giving us a clear advantage over other competitors.
6.2 Sales Strategy
We will attract our customers towards us through various efforts, such as:
- We will advertise our driving school in magazines, newspapers and social media
- We will offer discounts on the membership for the first three months of the launch
- We will arrange seminars and awareness sessions on the importance of road safety in various educational institutions which will also promote our company
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6.3 Sales Forecast
Our sales are forecasted in the following column charts:
The detailed information about sales forecast is given in the following table:
|Unit Sales||Year 1||Year 2||Year 3|
|Normal driving training||187,330||260,320||258,240|
|Professional driving training||802,370||815,430||823,540|
|Advisory & consultancy services||265,450||322,390||393,320|
|TOTAL UNIT SALES||1,794,470||2,168,370||2,477,410|
|Unit Prices||Year 1||Year 2||Year 3|
|Normal driving training||$140.00||$150.00||$160.00|
|Professional driving training||$600.00||$800.00||$1,000.00|
|Advisory & consultancy services||$650.00||$750.00||$850.00|
|Normal driving training||$214,800||$274,000||$333,200|
|Professional driving training||$120,050||$194,500||$268,500|
|Advisory & consultancy services||$139,350||$194,600||$249,850|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Normal driving training||$0.70||$0.80||$0.90|
|Professional driving training||$0.40||$0.45||$0.50|
|Advisory & consultancy services||$3.00||$3.50||$4.00|
|Direct Cost of Sales|
|Normal driving training||$98,300||$183,000||$267,700|
|Professional driving training||$66,600||$119,900||$173,200|
|Advisory & consultancy services||$19,400||$67,600||$115,800|
|Subtotal Direct Cost of Sales||$294,100||$699,400||$1,104,700|
6.4 Sales Monthly
6.5 Sales Yearly
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Personnel plan is also an important component of a driving school business plan, so make sure to develop it before thinking about how to start a driving school business.
7.1 Company Staff
The company will initially hire the following staff:
- 1 General Manager for managing the overall operations
- 2 Administrators/Accountants for maintaining financial records
- 4 Sales Executives responsible for marketing and discovering new ventures
- 10 Trainers for providing driving training to members
- 2 Assistants for undertaking day-to-day tasks
- 1 Front Desk Officer for acting as a receptionist
7.2 Average Salary of Employees
|Year 1||Year 2||Year 3|
|Front Desk Officer||$35,000||$42,000||$59,000|
The last thing to do before thinking about how to start your own driving school is to develop a financial plan outlining the development of your company over the next few years. The financial plan of Star Driving School is as follows.
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||10.00%||11.00%||12.00%|
|Long-term Interest Rate||10.00%||10.00%||10.00%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5530|
|Monthly Revenue Break-even||$159,740|
|Average Per-Unit Revenue||$260.87|
|Average Per-Unit Variable Cost||$0.89|
|Estimated Monthly Fixed Cost||$196,410|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$15,100||$19,153||$23,206|
|TOTAL COST OF SALES||$15,100||$19,153||$23,206|
|Gross Margin %||94.98%||94.72%||94.46%|
|Sales and Marketing and Other Expenses||$1,850||$2,000||$2,150|
|Total Operating Expenses||$188,766||$220,744||$252,722|
|Profit Before Interest and Taxes||$105,205||$146,040||$186,875|
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8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$7,023||$8,610||$9,297|
|SUBTOTAL CASH FROM OPERATIONS||$47,143||$53,651||$59,359|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$47,143||$53,651||$55,359|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$35,296||$39,549||$43,582|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$35,296||$35,489||$43,882|
|Net Cash Flow||$11,551||$13,167||$15,683|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$201,259||$237,468||$273,677|
|TOTAL LONG-TERM ASSETS||$980||$610||$240|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$9,482||$10,792||$12,102|
|TOTAL LIABILITIES AND CAPITAL||$198,839||$232,978||$267,117|
8.6 Business Ratios
|Year 1||Year 2||Year 3||Industry Profile|
|Percent of Total Assets|
|Other Current Assets||1.75%||2.02%||2.29%||27.40%|
|Total Current Assets||138.53%||150.99%||163.45%||54.60%|
|Percent of Sales|
|Selling, General & Administrative Expenses||74.29%||71.83%||69.37%||65.20%|
|Profit Before Interest and Taxes||26.47%||29.30%||32.13%||2.86%|
|Total Debt to Total Assets||2.68%||1.04%||0.76%||67.10%|
|Pre-tax Return on Net Worth||66.83%||71.26%||75.69%||4.40%|
|Pre-tax Return on Assets||64.88%||69.75%||74.62%||9.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||19.20%||21.16%||23.12%||N.A.|
|Return on Equity||47.79%||50.53%||53.27%||N.A.|
|Accounts Receivable Turnover||4.56||4.56||4.56||N.A.|
|Accounts Payable Turnover||14.17||14.67||15.17||N.A.|
|Total Asset Turnover||1.84||1.55||1.26||N.A.|
|Debt to Net Worth||0||-0.02||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$120,943||$140,664||$160,385||N.A.|
|Assets to Sales||0.45||0.48||0.51||N.A.|
|Current Debt/Total Assets||4%||3%||2%||N.A.|
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